When Insurance Doesn't Cover Property Damage: One Homeowner's Experience

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The Fire and the Claim

On February 17, 2021, a property owned by a homeowner was set on fire. The homeowner submitted a claim to their insurer, Suncorp. Unfortunately, Suncorp denied the claim, citing a clause in the policy's Product Disclosure Statement (PDS) that specifically excluded coverage for malicious acts and vandalism committed by a resident of the insured address with the policyholder's consent.

In this case, the homeowner's son - who was living in the property at the time - had caused the fire and subsequently pleaded guilty.

The Policy Exclusions

The exclusion the insurer cited is a common one in insurance policies. Policies contain various exclusions that limit coverage, and it's important for policyholders to review these carefully and understand what is and isn't covered.

In this case, the exclusion applied to the son's deliberate act that demonstrated "a reckless disregard for the consequences." The fact that the homeowner didn't consent to the fire was irrelevant because the son was living at the property with the homeowner's consent.

The Insurance Claim Dispute

The homeowner argued that the exclusion shouldn't apply because they didn't consent to their son lighting the fire. However, Australian Financial Complaints Authority (AFCA) disagreed, stating that the exclusion applied to anyone living at the property with the insured's consent. The panel said that it was satisfied that the son had caused the fire and that the exclusion applied.

Notably, while the court refused to record the son's guilty plea due to concerns about his mental health, AFCA said that there was not enough information about his state of mind to overrule the insurer's decision. AFCA added that the complainant could ask Suncorp to reassess its liability once a psychiatric report was provided and the court outcome had been determined.

The Settlement Offer

Following the claim's denial, Suncorp offered the homeowner an ex-gratia payment of $261,318, which the homeowner deemed insufficient for repair costs. The homeowner sought an additional $166,159 or $261,328, based on quotes provided.

However, AFCA noted that Suncorp's offer had been based on an itemised repair quote from an assessment by the insurer's builder, which the panel deemed fair.

Conclusion

Insurance policies can be complex and challenging to navigate, especially when dealing with policy exclusions. In this case, the homeowner's insurance policy didn't cover damages caused by their son, even though the homeowner didn't consent to the fire. Understanding the specifics of your policy - including the exclusions - is critical in knowing precisely what you are and aren't covered for.

Published:Thursday, 25th May 2023
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Clear

ATA Challenges Productivity Commission's Proposal to Double Truck Fuel Tax

01 Mar 2026: Paige Estritori

The Australian Trucking Association (ATA) has expressed strong opposition to the Productivity Commission's proposal to more than double the tax on truck fuel. The plan suggests phasing out fuel tax credits for trucking operators, effectively increasing the fuel tax rate from the current 32.4 cents per litre to 66.1 cents per litre by 2035. - read more

PERILS Revises Loss Estimate for November 2025 Storms in Queensland and NSW

01 Mar 2026: Paige Estritori

In a recent update, catastrophe data provider PERILS has increased its insurance industry loss estimate for the severe convective storms that struck Queensland and New South Wales between November 21 and 27, 2025. The revised estimate now stands at AU$2.95 billion, marking an 11% rise from the initial figure of AU$2.663 billion released in January 2026. - read more

Federal Court Denies Truck Driver's Insurance Claim Against Superannuation Fund

01 Mar 2026: Paige Estritori

In a recent legal decision, the Federal Court dismissed a truck driver's insurance claim against the Australian Retirement Trust. The case centred on whether the driver had active insurance coverage through his superannuation account, particularly concerning the 'dangerous occupation exception.' - read more

AIA Australia Introduces Enhancements to Priority Protection Life Insurance

28 Feb 2026: Paige Estritori

AIA Australia has announced significant updates to its Priority Protection life insurance suite, effective from 9 November 2025. These enhancements are designed to simplify discounts, improve policy clarity, and support premium affordability for policyholders. - read more

Decline in Life and Income Protection Insurance Premiums Benefits Australians

28 Feb 2026: Paige Estritori

Recent data indicates a notable decline in life and income protection insurance premiums across Australia, providing consumers with more affordable coverage options. According to the latest Direct Life Insurance Report from Rainmaker Information, direct life premiums have decreased by 7% since 2024. Similarly, direct income protection premiums have seen significant reductions, with average premiums for waiting periods of 30 days and 90 days decreasing by 12% and 13%, respectively. - read more

Click for more Insurance News